Analysts eye potential takeover targets

Broker Nomura said funding conditions could spur more deals.

Traders never fail to get excited by a takeover and today broker Nomura spurred hopes that a spate of deal-making could be in the offing.

Analysts noted that European companies have been busy raising money in the investment-grade and junk-rated corporate bond markets since the summer. That could herald in an increase in mergers and acquisitions.

“One cannot ignore the fact that funding conditions in terms of market access and pricing have eased significantly and this can only be good for companies/private equity firms wishing to embark on aggressive growth investments,” Nomura said.

The broker went on to list 16 possible M&A targets across Europe, which included Informa, up 0.3 at 385.3p, Invensys, down 2.6 at 216p, and Severn Trent, 16p higher at £15.45.

In the wider market, Tuesday’s brief rally, sparked by hopes of a Spanish bail-out, proved short-lived. European Union commissioner Olli Rehn today praised measures taken by Spain to tackle its 2012 and 2013 budget deficits, dampening hopes of imminent aid, and the FTSE 100 lost 64.24 points to 5,722.01.

Among the blue-chips, confirmation from engineer AMEC that it would report “double-digit underlying revenue growth” this year pushed the shares up 23p to £10.56.

Centrica topped the FTSE 100, rising 7½ to 318.3p. The shares lost 8.8p on Tuesday amid allegations energy groups had been involved in price-fixing. The six biggest suppliers, including Centrica, denied the claims. The company said today it found nothing unusual about wholesale gas market trades made on September 28, when unusual trading is alleged to have taken place.

Debt concerns weighed on Russian steelmaker Evraz, which is part-owned by Roman Abramovich. The group sought approval from investors in a bond due in 2015 to remove a covenant that requires the group to “maintain the net leverage ratio at or below a specified level”. Evraz fell 16.4 to 217.4p.

The news that Ivory Coast president Alassane Ouattara had dissolved the government saw Randgold Resources tumble 355p to £65.75. The FTSE 100 group operates the Tongon gold mine in the country and the move from Mr Ouattara raises the prospect of further instability in the Ivory Coast, which was ravaged by violence following the presidential election in 2010. A sale of 45,000 Randgold shares by chief executive Mark Bristow did not help sentiment towards the company either.

Liberum Capital brought pressure to bear on Barclays and Royal Bank of Scotland. The broker cut its recommendation on both lenders to “hold” from “buy”, in part because of the recent “disappointing” progress made in tackling Europe’s debt crisis. Barclays shrugged-off the downgrade and edged up 0.35 to 237.65p and RBS put on 0.1 to 277.7p

Meanwhile, the suggestion that J Sainsbury’s 26pc shareholder Qatar could sell its stake in the group was floated today and weighed on shares in the supermarket company, which also reported first-half results. Sainsbury fell 8.4 to 338.8p.

On the FTSE 250, which finished 78.57 points lower at 11,718.65, news of agreed merger terms between Britvic and AG Barr saw the former climb 18.7 to 387p, while the latter ended the day up 18.6 at 450.8p.

Troubled nickel miner Talvivaara surged 21.6 -almost 26pc- to 105p after the group stemmed a waste water leak that brought production at its Sotkamo mine in Finland to a halt on November 4.

Confirmation of the tough conditions facing broker ICAP saw the shares retreat 28½ to 281.4p, after the group reported pre-tax profits tumbled 55pc to £68m in the first-half. However, trading software group Fidessa, which provided further evidence of the difficult market conditions in a statement last month, advanced 43p to £13.18 on the back of an upgrade to “buy” from “hold” at Jefferies.

The company also revealed that chief executive Chris Aspinwall and chairman John Hamer had added to their holdings in the group, with Mr Aspinwall buying 10,441 Fidessa shares at £12.73.8 apiece and Mr Hamer purchasing 2,500 shares at the same price.

There was news of buying at beleaguered defence equipment group Chemring, down 1.7 to 222.2p, too. The company announced its new chief executive, Mark Papworth, bought 50,000 shares at 225.253p each and chairman Peter Hickson purchased the same amount at 223.7063p apiece. US private equity group Carlyle recently pulled out of bid talks for the group, putting pressure on the shares.

Finally, United Drug jumped 14 to 231p after posting an 11pc increase in full-year pre-tax profits.

Great Portland boosts acquisition war-chest with placing

Great Portland Estates bolstered its war-chest by raising £140.6m from a share placing to help with acquisitions.

The FTSE 250 property group issued 31.25m shares, or about 10pc of the company’s ordinary share capital, at 450p apiece, in a placing run by Credit Suisse and JPMorgan Cazenove.

Great Portland now has about £400m in cash and undrawn credit facilities and has already identified acquisition opportunities, most of which are in London’s West End.

The purchases of three properties with a combined valued of £110m are already under “detailed discussions”, the company revealed, while another three are undergoing “detailed analysis”.

Shares in Great Portland finished the day little changed, down just 1.3 at 458p.